Companies keep Revolutionizing the Customer Experience with AI

In the era of cutting-edge technologies and the COVID-19 pandemic, companies are striving to use the most advanced technologies to offer a more efficient service quality and enjoyable customer experience. The use of technologies such as artificial intelligence (AI) and machine learning (ML) is becoming part of the ‘new normal’. It is excellent if your company invests in these technologies, but it is time to ask some crucial questions. Are your customers really interested in using AI-enabled services? What are they sacrificing? And what are the missing pieces to improve their experience? What can AI providers and e-commerce firms do to ensure customers feel empowered and are genuinely more in control?

What our research shows?

Our recent research focuses on customer’s perceptions of AI-enabled customer experiences offered by leading global beauty brands. These services, such as Virtual Artist applications and chatbots, offer customers a chance to virtually apply make-up products. Our findings show that customers are most interested in the personalization offered by these services, along with other elements of AI-enabled service quality such as interface design, reliability, and customer service. In addition, AI-enabled service security plays a significant role in providing a pleasant customer experience. However, keeping customer’s data secure remains a significant issue for global companies, despite the existence of the GDPR. Given the ‘black box’ nature of AI, ensuring ethical and secure use of this technology remains a challenge. 

AI-enabled services are mostly automated and provide customers with convenience since they are available 24/7 and can offer personalized product recommendations. Customers can use these services and purchase products from home, which is an excellent added benefit. This led most companies to assume that convenience is the single most important factor to motivate their customers to use AI-enabled services, and it has become an even more important factor during the ‘new normal’ caused by the COVID-19 global pandemic, which accelerated the use of digital technologies. However, our findings suggest that convenience does not necessarily reduce the amount of sacrifice customers feel when using these services. 

The challenge: Benefits vs. sacrifice  

Our findings show that customers are aware of their sacrifices when using AI-enabled services despite their benefits. They perceive the loss of their privacy, loss of their control over a situation that involves the use of these services, the efforts they make in trying to understand how these services work, the time consumed when using these services and exploring choices, the irritation caused when these services fail to provide what they are intended to provide and the lack of empathy and human interactions, as major sacrifices affecting their perceptions of the hedonic and recognition parts of their experience. Customers still consider these ‘sacrifices’ as unresolved issues when using these services.  Some of these issues are still a challenge for companies to address, for example, how AI can be utilized to understand consumer behavior in a more meaningful way and provide a more human-friendly experience. Also, customers may interact with these services for different purposes. For example, a chatbot can be used to acquire product recommendations or information or ask a general question, but the customer interaction with chatbots can also entail handling complaints and negative experiences. Hence, a chatbot should also efficiently handle customer complaints about service failure issues, which often entail different complex emotions and require emotions chatbots cannot show, such as empathy and care. 

Trust is crucial

Customer trust plays a critical role in AI-enabled experiences. Given that AI is a complex and potentially ambiguous technology, gaining customer trust is a significant challenge in AI-enabled services. Companies can build this trust by developing a good understanding of AI and ML before integrating them into the services they offer. Being transparent in terms of how these technologies are used and for which purposes is also essential. AI providers and e-commerce companies should share what they do to balance between privacy and personalized campaigns and offers enabled by ML. This is important in both the B2C and B2B contexts to empower customers by making them more informed. 

AI providers and e-commerce firms should put security strategies at national and global levels for all their employees to follow. Such strategies will potentially help in tackling the problems that are currently known about AI and ML. More importantly, these firms should engage in knowledge sharing platforms and discussions on what is still not well-known about the potential and threats associated with these technologies and agree on standard guidelines to follow. This helps to minimize errors that severely impact customer trust, which cannot be retained if lost. 

What the future AI-enabled service may look like

Our findings show that while convenience is a key advantage of AI-enabled services, it is vital for companies to understand that convenience alone is not sufficient to overcome the significance of sacrifices customers feel they have to make while using their services, such as loss of control, loss of privacy, or a lack of human interaction. It is essential to acknowledge that perceived sacrifices remain important concerns for the customer, even after several interactions with AI-enabled services. Companies should respond by maintaining collaborations with AI systems designers to address these concerns. For example, as one feature of AI-enabled services that companies can benefit from, automation has the potential to offer flexibility and cost savings, yet, the lack of human interaction remains an issue for customers, which does not decrease in importance for consumers even when AI-enabled services increase their convenience. Accordingly, companies should aim for a balanced approach in terms of human interaction, for example, through carefully personalized experiences accompanied by a well-trained customer support team. 

Some of the sacrifices customers feel they are making may not be fixed in the short term from a technology perspective, requiring human intervention and more careful planning to reach the best results. Hence, companies should ensure the presence of a human element in these new types of services for the short term. Additionally, it is important to examine whether and how AI can enhance brand image, loyalty, and emotional attachment. We expect AI-enabled services to still require human intervention in the near future to balance the customer experience between convenience and enjoying a more human-friendly approach. The element of creativity will always be needed for an engaging and enjoyable customer experience. Hence, human intervention to supplement these services will remain required. 

However, interestingly, some of the issues considered by customers as ‘sacrifices’ when using AI-enabled services may not require any intervention from companies in the future because they can be resolved as the technology evolves. For example, the feeling of lack of empathy and human intervention and the lack of control over a situation that involves interacting with AI-enabled services are outcomes of the automation enabled by AI and ML and the lack of customer experience in using these services. As these technologies evolve further, they are expected to learn how to interact with customers in a more ‘human-friendly’ way. Also, the use of these advanced technologies has accelerated unexpectedly due to the pandemic, so customers are potentially becoming more experienced in using these services. 

Although AI is not a new concept, the technology is far from being fully ready to meet all customer service demands. While companies need to adapt and creatively use innovative technologies, it is essential first to understand how consumers perceive their effects, precisely the potential benefits and issues they may associate with them. Companies need to understand better the customer perspective, which is a critical first step towards an effective strategy to implement AI in services. A better understanding of the customer perspective of these technologies in B2C and B2B contexts is a critical first step towards an effective strategy that utilizes such cutting-edge technologies.